LegalandPublicPolicyConsiderationsoftheEUReferendum

Brexit, Exit from Brexit and the loss of British Privileges as a legal consequence

In the wake of the impending Brexit declaration pursuant to Article 50 of the Treaty on European Union (TEU) there have been extensive discussions as to whether any Brexit notice could itself be withdrawn during the two year notice period. This question has been identified as a crucial issue by the Lord Chief Justice during the hearings in October (and the judgment handed down on 3 November 2016) in the case of The Queen on application of Santos & Miller v. Secretary of State for Exiting the European Union (“Santos”) in which the Claimants are challenging the Government’s assertion that it is able to serve a valid notice of withdrawal pursuant to Article 50 TEU without being expressly authorised to do so by Act of Parliament. One group of legal experts answers such question with a clear no, because Article 50 TEU does not explicitly provide for a right to withdraw the notice. The other group of legal experts argues the answer is a clear yes, because Article 50 TEU does not explicitly prohibit a withdrawal of the Brexit notice.

There is no straightforward answer to such question. We have identified this issue and described the arguments in our post of 20 May 2016 and 28 June 2016 on Brexit – can the UK Government change its mind after the UK has given the EU a Brexit notice? Those arguing that the Brexit notice can be withdrawn rely on Article 68 of the Vienna Convention on the Law of Treaties 1969, which provides that a notice to terminate or withdraw from an international treaty can be revoked at any time prior to the notice taking effect. It has, though, often been said by the Court of Justice of the European Union (CJEU) that the European Union is not merely a simple set of international treaty commitments subject to the terms of the Vienna Convention, but rather the constitutional charter of a community based on the rule of law which needs to be interpreted and applied autonomously and independently from the Convention. Those arguing against the revocability of the Brexit notice assert that Article 50 explicitly addresses the consequences of service of the notice, that is withdrawal from the EU within 2 years, whether or not the terms on which the withdrawal will take place have been agreed, and recognizes only a single instance in which withdrawal can be forestalled, namely where an agreement to delay withdrawal has been reached between the Member State and the European Council, acting unanimously. It is service of the notice, they argue, that ultimately triggers withdrawal, irrespective of any subsequent change in intention.

Ultimately, it would be the CJEU which decides whether or not the revocation was effective under European Law. This question could be brought before the CJEU, not only by the Council or a dissenting Member State, but also by the Commission, the European Parliament, or indeed, anybody at all through the preliminary ruling mechanism under Article 267 TFEU in proceedings before the domestic courts of any one of the 28 Member States, where the revocability of the Article 50 notice or the UK’s continued membership of the EU were at issue. It could also be brought to the CJEU by the Supreme Court in the course of the Santos case, should the Secretary of State for Exiting the European Union withdraw a concession made in the initial hearing that the Article 50 TEU notice cannot be withdrawn or made subject to conditions.

When applying the Treaties, the CJEU is not bound to apply the strict wording of the Treaties, but applies the effet utile principle, a purposive approach which would allow the Court to apply certain provisions under the Treaties to situations, not envisaged when the provision was made which are not covered by the express wording. Equally the CJEE could disapply certain provisions of the Treaties to situations, which are in principle covered by the relevant wording, but to which such provisions are inappropriate. This is done because the CJEU interprets and applies the Union’s legal order in an autonomous European legal style and this autonomous approach includes methods which are known in Germany, for example, as “analogy” or “teleological reduction”. This would be the case if and to the extent the purpose of the provision or the “effet utile” principle so requires.

Some have argued that the effet utile principle supports the UK’s right to revoke its Brexit notice, since revocation would preserve the European Union, and further its fundamental objectives. But little consideration has been given to the question of whether or not, after any withdrawal of the Brexit notice, the UK would stay in the EU on the same legal basis as at present, with the benefit of the special exemptions, rebates and privileges it has negotiated and obtained in the last 40 years under the existing Protocols to the Treaties. The CJEU could take the view that revocation would be effective only to the extent that the UK retains the same status as any other Member State, meaning that cherished privileges could be lost. Thus the effet utile could result in the UK being subject to the same obligations as any other new Member State, including the obligation, under Article 140 of the Treaty on the Functioning of the European Union (TFEU), to adopt the Euro once the European Council determines that the UK meets the convergence criteria for exchanging the Pound Sterling for the Euro.

As past and present politicians have said, politics is the art of the possible. And law no less than politics. It is instructive to consider the probable legal consequences of the UK purporting to revoke a Brexit notice which, as required by Article 50(2), had been served in accordance with its constitutional requirements. At present the precise nature of these constitutional requirements, specifically whether an Act of Parliament or some other form of Parliamentary decision is required, is as yet to be finally determined. Although the Supreme Court should provide an answer to that question in Santos, those proceedings will not provide an answer to the question as to what it would take for the UK to change its mind. A further round of UK litigation on the point, this time initiated by those in Britain who voted in favour of Brexit, can be confidently predicted. However, in this case even an Act of Parliament could not put the matter beyond doubt, due to the uncertainty as to whether or not revocation of the Brexit notice is permissible under EU Law. Moreover, the question, as well as any questions as to the extent of the UK’s ongoing membership and obligations following revocation, could also arise in domestic proceedings in other Member States or in disputes between the UK another Member States or the EU institutions. The answers to these questions could only be determined by the CJEU, resulting in continued uncertainty and potential loss of investor confidence. The economic damage that could result, compounded by the risk of it being held in the course of any such proceedings that the UK had lost its treasured opt-outs, or could even be compelled to adopt the Euro, would suggest that, whatever the true legal position might be, revocation of the Brexit notice, once served, is politically not a viable option and, should it have second thoughts, the UK’s only way back would be through a broader renegotiation of the EU Treaties.

On 3 November 2016 the initial judgement in the Santos case was handed down. The Court concluded that the Secretary of State does not have power under the Crown prerogative to give notice pursuant to Article 50(2) TEU for the United Kingdom to withdraw from the European Union; Parliamentary authorisation is required. The Government has already announced its intention to appeal to the Supreme Court. Depending on how the Government approaches that appeal, the question of whether or not an Article 50 notice can be revoked may arrive at the CJEU in the near future.

About Squire Patton Boggs:

We are a Top 10 law firm with 15 European offices as part of a global network of 45 offices in 20 countries and over 1500 lawyers, we have specialist teams in virtually every sector and geography that may be affected by a Brexit. Our Public Policy teams in Europe, and particularly in Brussels, alongside our colleagues in Washington DC, have decades of experience in advocating to advance your business objectives.